TSP Monthly Payment Calculator

How TSP Loan Repayment Works

A Thrift Savings Plan loan is money you borrow from your own retirement account and pay back with interest. The TSP does not lend you anyone else's money, and the interest you pay lands back in your account rather than in a bank's pocket. That structure makes TSP loans cheaper than most consumer credit, but it also means the loan is tied to your paycheck and to your federal employment.

Every TSP loan is repaid on a fixed schedule. The payment amount is set when the loan is issued and stays the same for the life of the loan. The only exceptions are a transfer to an agency with a different payroll cycle, or a stretch of approved nonpay status when payments are suspended.

Two limits shape the math before you ever see a payment figure. The minimum loan is $1,000. The maximum is the smallest of three numbers: your own contributions and their earnings, 50 percent of that same balance (or $10,000, whichever is greater) minus any outstanding loan, and $50,000 minus your highest outstanding loan balance during the previous 12 months. A participant with $80,000 of own contributions and no other loan can borrow $40,000, not $50,000, because the 50 percent test binds first.

The interest rate is the G Fund rate for the month before you request the loan, and it is locked for the entire term. In this calculator the default is 4.25 percent, which is close to recent G Fund returns. Change that field to match the rate quoted in your own TSP account before you rely on any number below.

The Amortization Formula Behind Every Deduction

Loan payments follow the same amortization math as a mortgage or a car note. The formula that produces your monthly payment is:

PMT = [P * r] / [1 - (1 + r)^(-n)]

In that expression, P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12 and then by 100), and n is the number of monthly payments. The term in the brackets on the bottom spreads the balance plus interest evenly across every payment so the loan reaches zero on the last one.

Run it on a $30,000 general purpose loan at 4.25 percent over 60 months. The monthly rate is 4.25 / 12 = 0.3542 percent, or 0.003542 as a decimal. Feed those values into the formula and the payment comes out to $555.89.

Each payment splits into interest and principal. In month one the balance of $30,000 accrues 30000 x 0.0035417 = 106.25 dollars of interest, so 555.89 - 106.25 = 449.64 dollars goes to principal. By month 60 the balance is nearly gone, almost the whole payment retires principal, and the loan closes at zero.

That split matters when you think about prepayment. Extra principal sent early removes interest from every later month, while extra principal sent in the final year barely moves the total. If you plan to pay a TSP loan off ahead of schedule, front load the extra payments.

General Purpose vs Primary Residence Loans

The TSP offers exactly two loan types, and the term you pick has to fall inside the band for that type. A general purpose loan runs 12 to 60 months and requires no paperwork beyond the application. A primary residence loan runs 61 to 180 months and requires documents showing the purchase or construction is still ahead of you.

The residence loan has strict rules on what counts. It can pay for a house, townhouse, condo, co-op shares, or a mobile home that you or your spouse will own. It cannot reimburse you for a deposit already paid, refinance an existing mortgage, fund an addition or a renovation, buy land by itself, or cover a home you already closed on.

The full rule set, including the current G Fund rate, is published on the TSP loans page. There is also a 30 business day cooling period. Once any TSP loan is repaid in full, you cannot take another loan until 30 business days have passed. Plan around that gap if you are sequencing a home purchase and a shorter general purpose loan in the same season.

Payroll Deduction Math: 26 Pay Periods or 12

Federal payroll runs on a schedule that rarely matches a calendar month. Most agencies pay every two weeks, which produces 26 paychecks a year, while some pay monthly or twice a month. The TSP divides your annual repayment obligation across whatever schedule applies, so the deduction on your leave and earnings statement is not half of the monthly figure.

The conversion is straightforward: annual repayment equals the monthly payment times 12, and the per paycheck deduction equals that annual figure divided by the number of pay periods. On a $30,000 loan over 60 months at 4.25 percent, the monthly payment is $555.89, so the annual total is about $6,670.68. Paid every two weeks, that becomes 6670.68 / 26 = 256.56 dollars per paycheck.

The small differences in the annual column come from rounding each deduction to the cent. Three paychecks in a two paycheck month feel like a bonus, but with a TSP loan the third check carries another deduction as well, so budget on the per period number rather than on a monthly average.

Loan payments come out of after-tax pay. You do not get a deduction for the interest, and the interest is not taxed again when you withdraw it later, because it was already taxed on the way in. That is one reason a TSP loan is not the same as a bank loan even when the rates look similar.

Worked Examples at 4.25 Percent

Three loan sizes show how term and balance interact at the same 4.25 percent rate. Each row assumes a general purpose loan with monthly payroll deduction and no other TSP loan outstanding.

The $15,000 loan costs $444.53 a month and $1,003.08 in interest across three years. Doubling the balance to $30,000 does not double the payment, because the term also stretches from 36 to 60 months, and the payment lands at $555.89. Interest more than triples, from $1,003.08 to $3,353.20, since the larger balance sits outstanding for two extra years.

The residence loan row is the one that surprises people. Borrowing $50,000 for 15 years produces the smallest payment of the three at $376.14, yet it costs $17,705.06 in interest. Shorten that same $50,000 to 60 months and the payment jumps to $926.48 while total interest falls to $5,588.67. The 15 year term saves $550.34 a month but adds $12,116.39 in interest over the life of the loan.

One more number worth checking before you sign: the $50 fee on a general purpose loan is deducted from the proceeds, so a $30,000 request deposits $29,950 while you repay the full $30,000 plus interest. On a $4,500 loan, that $50 fee equals 1.1 percent of the balance before a single payment is made.

Leaving Federal Service With an Outstanding Loan

A TSP loan is only available to current federal employees and members of the uniformed services in pay status. Once you separate or retire, you cannot take a new loan, and the loan you already have changes shape.

Payroll deduction stops when your pay stops. The TSP then expects payment by direct debit, check, or money order, on the same schedule and in the same amount as before. The loan does not become instantly due in a lump sum, but it does have to stay current. Missing payments puts the loan into default.

Default is where the tax bill appears. The unpaid balance plus accrued interest is declared a distribution from your account. The TSP reports it as taxable income for the year of the default, and if you are under 59 and a half and no exception applies, the IRS adds a 10 percent additional tax on top. A $20,000 outstanding balance in the 22 percent bracket could produce roughly $4,400 of federal income tax plus a $2,000 penalty, all without a dollar landing in your checking account.

The rules for early distributions, including the exceptions for separation from service in the year you turn 55 or later, are set out by the IRS, and the OPM retirement center covers what happens to your benefits at separation. If you are close to retirement and carrying a loan, the cheapest move is usually to pay it off before your final paycheck rather than let it default after separation.

Periods of approved leave without pay create a smaller version of the same problem. Payments can be suspended for up to a year, and the TSP recalculates the schedule afterward to catch up. The payment rises when you return, sometimes sharply, so ask for the recalculated figure before you take unpaid leave.

TSP Loan vs Other Borrowing Options

The headline case for a TSP loan is simple: the interest goes to you instead of a lender. On a $30,000 loan at 4.25 percent over five years, the $3,353.20 of interest is credited to your own account. A personal loan at 11.5 percent for the same amount and term costs $9,586.69 in interest that you never see again, and a credit card at 22 percent costs $19,714.04.

The comparison is not fair to the TSP, though, and the missing piece is opportunity cost. Money pulled out of your account stops earning for the length of the loan. If your portfolio would have returned 7 percent, a $30,000 loan held for five years leaves roughly $12,000 of growth on the table, which is more than the interest you pay yourself. The TSP makes this point in its own loan guidance, and it is the strongest argument for borrowing as little and for as short a time as possible.

Two smaller costs belong in the math as well. The $50 processing fee never returns to your account. And the loan balance is treated as an outstanding obligation when the TSP calculates how much you can borrow next time, so a large loan shrinks your future access.

Use a TSP loan for a bridge, not a lifestyle. A $12,000 loan repaid over 24 months at 4.25 percent costs $522.44 a month and $538.45 in interest, which is a reasonable price for avoiding a credit card. Financing a $30,000 kitchen renovation over five years is a different decision, and it deserves a hard look at the retirement balance you are pausing.